Ok, so apparently 14 or more state Attorneys General, including my state’s AG, Mike Cox, have filed lawsuits to try to stop the recently enacted Healthcare Reform Act.  These AG’s claim to acting in the interests of their citizens to “protect” them against waste, fraud, and so-called unconstitutional mandates by the federal government.  Apparently in their desire to save taxpayers’ money, these same AG’s didn’t do their homework.

Paul J. O’Rourke at OpenSalon notes that the AG’s claim that:

“The Constitution nowhere authorizes the United States to mandate, either directly or under threat of penalty, that all citizens and legal residents have qualifying health care coverage,” the lawsuit states.

He then proceeds to give the AG’s a history lesson.  It seems our founding fathers, people I presume knew something about the constitution (and the Fed Gov’s power has only gotten wider since) enacted a mandate on private persons for a healthcare insurance scheme back before 1800:

The history lesson

In July, 1798, Congress passed, and President John Adams signed into law “An Act for the Relief of Sick and Disabled Seamen,” authorizing the creation of a marine hospital service, and mandating privately employed sailors to purchase healthcare insurance.

This legislation also created America’s first payroll tax, as a ship’s owner was required to deduct 20 cents from each sailor’s monthly pay and forward those receipts to the service, which in turn provided injured sailors hospital care. Failure to pay or account properly was discouraged by requiring a law violating owner or ship’s captain to pay a 100 dollar fine.

This historical fact demolishes claims of “unprecedented” and “The Constitution nowhere authorizes the United States to mandate, either directly or under threat of penalty…”

Perhaps these somewhat incompetent attorneys general might wish to amend their lawsuits to conform to the 1798 precedent, and demand that the mandate and fines be linked to implementing a federal single payer healthcare insurance plan.

With conservatives on the Supreme Court that think corporations have been oppressed and denied the ability to “speak”, it’s always possible that strange things happen.  But, frankly, I don’t see how these suits are anything but state Attorneys General wasting taxpayer money in order to promote their own political careers.

BTW: in case you don’t believe O’Rourke, try checking out WikiSource and read the law for yourself.

Healthcare Reform in 2 sentences

Excerpting from Brad Delong:

we have moved from having by far the worst health care financing system in the OECD to a health care financing system that is merely bad by the standards of the OECD…

…People will wake up one morning and realise that the healthcare bill hasn’t brought socialism to America. And … realise we have not magically solved all our healthcare problems. People should calm down a little. There has been a tendency to exaggerate recently.

They’re Catching Us! (yeah, sort of)

The latest unemployment stats (Feb 2009) by state are out at BLS. Nationally, it’s still an ugly picture. But for Michigan, which has been through so much pain, things are still continuing to improve.  Slowly, but it’s the right direction.  The rate is now down to 14.1% from a high of the mid-15’s last year.  We still ‘lead’ the nation, but by a much smaller margin.  Nevada, Rhode Island, Florida and California are catching us.

Overall this is really a mixed picture for Michigan.  It confirms what I said last summer that MI was the pioneer in this recession.  We took our hits hard and early.  But with the smooth exit from bankruptcy for GM and Chrysler, and with a rejuvenated Ford, Michigan is slowly starting to improve.  Unfortunately, the actual real increases in employment (as opposed to fewer people looking) are concentrated only in healthcare and education.  We need manufacturing to grow. But manufacturing can’t really grow until and unless those other 49 states turnaround and grow too.  They buy what we make.

As usual, Calculated Risk summarizes and offers the updated cool graph:

From the BLS: Regional and State Employment and Unemployment Summary

Twenty-seven states recorded over-the-month unemployment rate increases, 7 states and the District of Columbia registered rate decreases, and 16 states had no rate change, the U.S. Bureau of Labor Statistics reported today. Over the year, jobless rates increased in 46 states and the District of Columbia and declined in 4 states.

Michigan again recorded the highest unemployment rate among the states, 14.1 percent in February. The states with the next highest rates were Nevada, 13.2 percent; Rhode Island, 12.7 percent; California and South Carolina, 12.5 percent each; and Florida, 12.2 percent. North Dakota continued to register the lowest jobless rate, 4.1 percent in February, followed by Nebraska and South Dakota, 4.8 percent each. The rates in Florida and Nevada set new series highs, as did the rates in two other states: Georgia (10.5 percent) and North Carolina (11.2 percent).
emphasis added

State Unemployment Click on graph for larger image in new window.

This graph shows the high and low unemployment rates for each state (and D.C.) since 1976. The red bar is the current unemployment rate (sorted by the current unemployment rate).

Fifteen states and D.C. now have double digit unemployment rates. New Jersey and Indiana are close.

Four states and set new series record highs: Florida, Nevada, Georgia and North Carolina. Three other states tied series record highs: California, Rhode Island and South Carolina.

GDP Q4, 2009 revised down to 5.6% Growth rate

The last of the regular revisions of the quarterly GDP estimates for 2009 shows 5.6% GDP growth rate in 4Q 2009. That’s down from the 2nd revision’s estimate of 5.9%.  Not a big adjustment, but disturbing that the source of the adjustment is a downward revision in C and I.  C (represented as PCE-Personal Consumption Expenditures) in the table below and I (investment: the other three items) were weaker than previously thought. Not a good sign.  For a true, solid recovery we need those to get much stronger.  Prospects for a possible “double-dip” recession continue to be good.  I put it at even money.  Now is definitely not the time to be cutting back on G expenditures.

From  BEA via Calculated Risk:

The headline GDP number was revised down to 5.6% annualized growth in Q4 (from 5.9%). The following table shows the changes from the “advance estimate” to the “second estimate” to the “third estimate” for several key categories:

Advance Second Estimate Third Estimate
GDP 5.7% 5.9% 5.6%
PCE 2.0% 1.7% 1.6%
Residential Investment 5.7% 5.0% 3.8%
Structures -15.4% -13.9% -18.0%
Equipment & Software 13.3% 18.2% 19.0%

Note that PCE and Residential Investment (RI) – the two leading categories – were both revised down for Q4. This suggests that final demand was weaker in Q4 than in the previous two estimates.

Scare-mongering on Social Security Continues

I thought Halloween and it’s horrible scary-stories was 5 months ago.  Apparently I’m wrong. The NY Times is running a front-page (on the web at least) scary headline about Social Security that implies the system is starting to fail and will go bust.  Nonsense.  I’ll let Randy Wray from UMKC and New Economic Perspectives explain:

Ok, here is the dumbest headline the NYTimes has run in recent days:

Social Security Payouts to Exceed Revenue This Year
The system is expected to pay out more in benefits this
year than it receives in payroll taxes, a tipping point
toward insolvency.


Social Security is a federal government program. Government pays Social Security benefits by crediting bank accounts. It can continue to do this even if payroll taxes fall to zero. The payment is an entry on the balance sheet of the Social Security recipient’s bank. Please write your representative and tell her or him to stop this nonsense right now.

Just as Wall Street went after healthcare, you can be sure that it is now going after Social Security. They hype is just starting. It comes in waves—whenever Wall Street loses a bundle, it looks to government bail-outs. What happened after the dot.com bust? Wall Street got President Bush to talk about an ownership society, proposing to dismantle Social Security to give households “ownership” over their own personal retirement accounts. The nonsense was obvious at the time: Wall Street had a big hole to fill, so it wanted households to “invest” payroll tax receipts in Wall Street managed accounts. That way, the same bozos who had just wiped out private savings by inducing gullible households to invest in pets.com would be able to wipe out retirements investing in other Wall Street schemes. Wall Street lost that round.

But now it is back. Wall Street’s latest excesses managed to destroy the economy. Those who lost their jobs or who had to take paycuts are paying less in FICA taxes. Hence, Social Security’s “revenues” are lower. That is a big boon to Wall Street—which will now whip up hysteria about Social Security’s looming bankruptcy. This is to direct attention away from the true insolvencies—which is all of the major private banks. It is also designed to scare the population about Social Security: will I ever get my Social Security pension?

Make no mistake about this. Unless voters tell their representatives to keep their dirty hands off Social Security, the Democrats and Republicans will work out a “compromise” to turn it over to Wall Street—just as they did with health insurance “reform” in the HIBOB (health insurer’s bail out bill). This is priority number one for Wall Street now, since it has lost trillions of dollars and is massively insolvent. It needs more government bail-out and it wants your Social Security.

Exile on Main Street

Back in the beginnings of the 2008 Global Financial Meltdown, there was  a lot of talk about how and whether the troubles on Wall Street would affect “Main Street”. After all, not all downturns on Wall St. result in recessions. Of course, in the actual event, Wall Street’s troubles were severe but quickly remedied by federal government and Federal Reserve bail-out and rescue efforts.  Unfortunately, the rescue efforts were could not prevent the spill-over onto Main Street.  The real economy of everyday goods and services production and consumption (“Main Street”) has suffered mightily.  Extraordinarily high and persistent levels of unemployment, declines in real wages and hours worked, evaporating credit for small businesses, etc. have inflicted real pain.  Most distressing is the the disconnect between the ideology pursued by policymakers in Washington and the reality of distress.  The policymakers continue to pursue a belief that subsidies and tax cuts for Wall Street and Global Multi-nationals will encourage them to lead the recovery on Main Street.  The evidence says otherwise.

Robert Reich agrees and summarizes as:

Recovery depends on Main Street, by Robert Reich, Commentary, Financial Times: Can the American economy recover if only its big global companies, Wall Street and high-income Americans are doing better, but its small businesses and middle and lower-income Americans are not? The short answer is no. …

US companies have lots of cash… But this cash is not going into new investment. … None of this is stopping supply-side fanatics from arguing government needs to cut taxes on big corporations to spur the recovery. Their argument is absurd. Big companies do not know what to do with all the cash they have as it is. They are not investing it in new plant or jobs. So why should the government cut their taxes and enlarge their cash hoards even more?

The picture on Main Street is the opposite. Small businesses are not selling much as they have to rely on American consumers and Americans still are not buying much.

Small businesses are also finding it hard to get credit. … While big companies are finding it easy to borrow in the bond markets, smaller companies depend on bank credit, whose supply remains limited. … This is a problem because companies with fewer than 100 employees accounted for almost half of net job growth during the last two recoveries…

Unemployment or fear of it continues to haunt the population. That is a major reason why consumer confidence is still dropping. There is also the extra need to save as boomers face retirement. Given all this, it is sensible for Americans to continue holding back from the malls, but this means a painfully slow recovery. …